Actuarial Gains and Losses

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Actuarial Gains and Losses

The actual amount a company pays on its pensions compared to previous estimates. An actuarial gain occurs if the company pays less than it thought it would, while an actuarial loss happens if it pays more than expected. Actuarial gains and losses may result in a change to a company's actuarial assumptions. See also: Actuarial adjustment.

Note 1: The effect on the Actuarial Accrued Liability and/or the Normal Cost resulting from changes in the Actuarial Assumptions, the Actuarial Cost Method or pension plan provisions should be described as such, not as an Actuarial Gain (Loss).

For each period a statement of income is presented, the net actuarial gain or loss and the prior service cost or credit must be recognized in other comprehensive income, separated into amounts initially recognized in other comprehensive income and amounts subsequently recognized as adjustments to other comprehensive income, as those amounts are included as components of net periodic benefit cost.

The excess of the net accumulated actuarial gain (loss) over 10% of the greater of the benefit obligation and the fair value of plan assets is amortized over the average remaining service period of active employees.

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